-A shift from AD₁ to AD₂ in Figure 11.2 will

Question

Quizplus · Accepted Answer

Moving from AD₁ to AD₂ indicates a shift from a lower level of aggregate demand to a higher level. This means that there will be an increase in GDP, but not enough to close the GDP gap completely. Therefore, choice B is the best answer. Choices A and C are incorrect because there is no indication in the question that the shift will worsen unemployment or cause significant inflation. Choice D is also incorrect because the shift only reduces, but does not eliminate, the GDP gap.

-A Shift from AD1 to AD2 in Figure 11

-A Shift from AD₁ to AD₂ in Figure 11